Start investing in PPF in the name of the child, you will get more interest than the bank FD and you can also take a loan on the deposit amount.
Parents can also open a PPF account in the name of their minor child
PPF accounts are currently earning interest at the rate of 7.1% per annum
Public Provident Fund (PPF) is considered to be the right choice for investment. Under this scheme, interest is currently paid at the rate of 7.1% per annum, which is much higher than a bank fixed deposit. You can strengthen your future financially by opening a PPF account for your child. You can raise a large fund by investing in this scheme in your child's name for 15 years.
Even if the child grows up, the investment can be continued
If you start investing in PPF in the name of your child from the age of 10, PPF will mature by the age of 25. He can then withdraw the money if he wants and if he is not in a hurry to withdraw the money, the investment can be extended for 5 years.
It is not necessary to invest if you go ahead
It is not necessary to invest in it if it goes beyond 5 years. There is no need to deposit any amount if you do not want to. Whether you invest or not, you will continue to receive interest at the rate of 7.1% on the deposit amount. He can withdraw money when the child is 30 years old and if he still does not need the money he can raise it again for the next 5 years.
Can open an account for Rs.500
The minimum amount for opening a PPF account is Rs.500. A minimum deposit of Rs 500 is required in a financial year, while the maximum investment limit is set at Rs 1.5 lakh per annum.
Get cheap loans on PPF
You can also take a loan against a deposit in a PPF account. You are entitled to take a loan from PPF from the end of the financial year in which you have opened a PPF account to the end of the fifth financial year. If you have opened a PPF account in January 2017, you can take a loan from 1 April 2018 to 31 March 2022. You can take a loan up to a maximum of 25% on the deposit amount.
You will get the benefit of tax exemption
PPF falls into the category of EEE. That is, you get the benefit of tax exemption on the entire investment made in the scheme. In addition, there will be no tax on the interest earned on the investment in this scheme and the full amount of the investment. Interest on PPF investments fluctuates every three months.
PPF account cannot be confiscated
The PPF account cannot be forfeited at the time of loan or other liability by any court or order.
A large fund will be easily prepared
Under this scheme, with an investment of just Rs 1,000 per month, you can create a fund of around Rs 3.20 lakh in 15 years. Also, if you invest Rs 2,000 a month, you can create a fund of around Rs 6.40 lakh in 15 years.
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An account can be opened at a post office or a bank
A PPF account can be opened in the post office or bank in one's own name or by another person on behalf of the minor. However, as per rules, PPF account cannot be opened in the name of Hindu Undivided Family (HUF).
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